European stocks climbed to new record levels on Thursday as strong corporate earnings supported investor confidence.
Positive results from companies in the media, defence and telecommunications sectors outweighed weakness in technology shares. Ongoing geopolitical uncertainty in the Middle East also remained in focus.
The Stoxx Europe 600 Index rose 0.5% and reached a new all-time high. European benchmarks have now gained nearly 11% since the beginning of the year.
Germany’s DAX advanced 0.2%, while France’s CAC 40 climbed 0.7%. London’s FTSE 100 added 0.2%.
Strong Earnings Support the European Rally
The European stock market rally has been supported by resilient corporate balance sheets and easing inflation.
Strong second-quarter earnings have also encouraged investors to increase their exposure to European equities.
Banking stocks have attracted significant inflows as lenders continue to benefit from healthy net interest margins.
At the same time, demand linked to artificial intelligence has supported companies involved in industrial power equipment, electricity grids and energy infrastructure.
WPP Shares Surge After Better-Than-Expected Results
WPP was one of the strongest-performing European stocks during the session.
Shares in the London-listed advertising company jumped approximately 25% after its first-half results exceeded cautious market expectations.
The company reported improving revenue trends and stronger cost controls under its new turnaround strategy.
The results raised hopes that WPP may be beginning to stabilise after a difficult period for the advertising group.
Defence and Telecom Stocks Gain
German defence contractor Renk gained 5.5% after reporting a sharp increase in second-quarter orders.
The order figures exceeded analyst forecasts and highlighted continued demand across the European defence sector.
Deutsche Telekom shares also rose around 5% following a solid quarterly update.
These gains helped offset losses in other parts of the European market.
Technology Stocks Fall on AI Spending Concerns
Technology shares underperformed as weakness across Asian technology supply chains spread to European markets.
Hardware and semiconductor companies faced selling pressure following earnings updates from Advanced Micro Devices and newly listed SpaceX.
Both companies reportedly exceeded quarterly profit expectations.
However, investors were concerned about their projections for heavy spending on artificial intelligence infrastructure.
The high investment requirements raised questions about expensive valuations and how quickly AI-related spending could generate returns.
Siemens and Wizz Air Shares Decline
Several major European companies moved lower following disappointing updates.
Siemens shares fell approximately 6% after the industrial group released its quarterly results.
Budget airline Wizz Air declined 5.3% after reporting a first-quarter operating loss.
The airline’s weak performance added pressure to the wider travel sector during the session.
Iran-Oman Proposal Supports Market Sentiment
European investor sentiment received some support from reports of a possible diplomatic agreement involving Iran and Oman.
The proposal is reportedly aimed at easing the military confrontation between Iran and the United States. It could also help restore maritime security in the region.
Under the reported terms, Iran would oversee ships entering the Strait of Hormuz, while Oman would supervise outbound maritime traffic.
The Strait of Hormuz is one of the world’s most important routes for global oil and gas shipments.
Oil Prices Stabilise After Sharp Decline
Crude oil prices stabilised after falling sharply during the previous two trading sessions.
The possibility of a diplomatic agreement has reduced immediate concerns about disruptions to energy supplies.
Lower geopolitical risk has also helped contain expectations of another surge in energy-driven inflation.
However, stabilising oil prices limited the additional relief that falling crude costs could provide to bond yields and equity markets.
U.S. Jobs Data Moves Into Focus
Investors are now preparing for an important series of U.S. labour market reports.
The ADP private payrolls report is due on Thursday, followed by the official nonfarm payrolls report on Friday.
These figures could influence expectations for the Federal Reserve’s next interest rate decision.
European investors will also examine the data for clues about the broader global economic outlook.
Federal Reserve Rate Expectations Ease
Financial markets have reduced expectations for another U.S. interest rate increase.
Interest rate futures now indicate a 48% probability that the Federal Reserve will raise rates by 25 basis points in September.
That figure stood at around 58% earlier in the week.
Weaker employment data could further reduce the likelihood of a rate increase. In contrast, strong job growth could revive expectations of tighter monetary policy.
European markets will therefore remain sensitive to U.S. employment figures, corporate earnings and developments in the Middle East.
